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1892

The Power of an Agent to Delegate His AuthorityHenry Irving GordonCornell Law School

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Recommended CitationGordon, Henry Irving, "The Power of an Agent to Delegate His Authority" (1892). Historical Theses and Dissertations Collection. Paper169.

THESIS

For the Decree of Bachelor of Laws.

- 000

THE POW Eg? OF AN AG ENT

T 0

DELEGATE HIS AUTHORITY.

- 000----

Henry Irving Gordon.

Cornell University.

1892.

TABLE OF CASES.

Chase' s Bl-ckstone - 102.

Lyons v. Jero 26------------------------ 26 'lend. 485.

58 N.Y. 461.

Perry on Trusts ---------------------------- 229.

8th, Ed. R. S.

Pearson v. Jai..eson

Ber -er & Icard v. Duff

Budsale v. Clark

"ast St. Louis v. Weherin--

Matthews v. City of Alexandria

Lord v. City of Aconto

State v. Jersey City

Buckland v. Conway

Dorchester Bank v. New England Bank

Allen v. Mrrchants Bank

Exchange Nat. Bank v. 'hird Nat. Bank ---

Edwards v. City of Watertown

Norwich University v. Denny --------------

Commercial Bank v. Norton

Bodine v. Ins. Co.

1 McLean 197.

4 John. Ch. ;369.

73 N.Y. 7,3.

50 Tll. 28.

68 Mo. 115.

47 ",is. 386.

25 N.J.L.

16 Mass. 396.

1 Cush* 177.

26 Wend. 485.

112 U.S. 278.

61 Flow. Pr. 488.

47 Vt. 9.

1 Hill 501.

51 N.Y. 123.

Barkersd ale v. Brown ------------------- 9 Am. Deco. 720.

Laussatt v. Lippincott ----------------- 6 S. & R. 386.

Darling v. Slanwood 14 Allen 504.

In the study of the law of agency, of the many sub-

jects discussed, an important and very interesting one,

is that which I have taken as the basis of this article,

and which is expressed by the maxim, "potestas delegata

non potest delegare."

To state the general rule relating to this subject,

one has merely to repeat the maxim just given. No dif-

ficulties arise when there is an attempt to express this

rule; but its application to the numerous cases which

have arisen, has been a matter of discussion throughout

the country. And where the rule has been applied va-

rious reasons are given for its application.

There is no doubt arising from the well known prin-

ciple that, "one acting under delegated authority, cannot

himself delegate that authority to another." An agent

may have the most ample power to bind his principal by

his acts and determinations, respecting the subject of

the agency, but this of itself gives him no authority to

delegate those powers to another.

The authority to delegate the power with which an

agent is intrusted,ought not, in the absence of words

conferring express authority, or from which such an au-

thority may be inferred, to be presumed. Upon this

subject the principles of the early writers are identi-

cal in substance, with the principles of the writers of

the present day; and may be traced to the same general

principle, that "an authority to delegate a delegated

authority will not be presunmed. In the absence of ex-

press authority the presumption is that the agent has

no such power.

The appointment of an agent in a particular case is,

as a rule, made because of some fitness which his prin-

cipal believes him to possess, and by reason of which he

is better qualified to carry out the purposes for which

he is appointed. When the performance of the agency

requires the exercise of special skill, judgment or dis-

cretion, on the part of the agent, the general rule,

previously stated, is particularly applicable, for the

reason that the authority is purely personal, the prin-

cipal placing more than ordinary confidence in the skill

and judgment of the person whom he appoints as his agent,

and are not capable of delegation.

The rule, potestas delegata non potest delegare, is,

however, subject to certain exceptions which grow out of

the circumstances of each case, and create an implied

authority to employ a subagent. These exceptions will

come up for consideration after the general rule has

been discussed and applied.

The general rule has not been comfined to that

class of persons who, strictly speaking, are known as

agents, but from an early period of our law has been laid

down, as to powers, to sell land, make leases,etc., given

by will or deed to executors, trustees and attorneys.

The courts of the present time have extended the princi-

ple to the loss formal appointments of factors, brokers,

and other commercial agents, and to corporations, both

municiple and private.

In treating the rule as applied in this broader

sense, I have thought it best to take each class and

deal with it separately.

Before entering upon this, it is well to understand

the distinction between acts and duties which are minis-

terial and those which are judicial. Ministerial acts

and duties are those which are definitely fixed and as-

certained. Acts and duties are judicial when they re-

quire the exercise of judgment and discretion.

Chase's Blackstone, note, p. 102.

As to those persons who are known strictly as agents

little need be said as the general rule and previous

discussion apply with particular force to that class.

An interesting question, however, came up in the

case of Lyons v. Jerome 26 Wend. 485, as to how far the

reason and policy of the rule applied to the delegation

of power by the State to its high public officers, made

by legislative act, A statute gave to canal conmission-t ake

ers power toAproperty for the construction and repair of

the canals. The defendant was Chief Engineer of im-

provements of a lock, on the Oswego Canal; and in that

capacityentered a quarry belonging to.the plaintiffs

and took therefrom a quantity of stone to use in the

repairing of the lock. The opinion written by Senator

Verplank, was the opinion of the majority. The Senator

says:

"The statute as well as the nature of the trust it-

self, shows that this is an authority confided to the

judgment and discretion of the conmissioners themselves,

for the impartial discharge of which they are responsible

to the State. The person thus entrusted may have occa-

sion to depend on scientific and professional advice for

the guidance of his own judgment; he may even, in matters

5.

not out of the scope of his own information, rely upon

the authority of his own advisors; yet he is still bound

to form a judgment for himself, and to resume its respon-

sibilities. In this case there was no exercise of judg-

ment or discretion whatever by the commissioners; there

was merely such a reliance on the supervision and judgr-

ment of the engineer, as might amount to an implied del-

egation of authority, had the commissioners been author

ized to make such a delegation. I have only to add that

it is the greatest public importance to establish the

general rule of agency that "delegated authority cannot

be delegated again without special power to do so", as

governing the officials, powers, acts and contracts of

our state officers." This case was followed in 58 N.Y.

461.

A general agent cannot submit a cause to arbitration

unless he has special authority to do so. If, however,

the agent is appointed to institute legal proceedings,

he may bind his principal by a submission to arbitration.

The reason for allowing the agent to thus bind his prin-

cipal is, that an authority to prosecute or defend a suit

implies a power to refer the subjeet, by rule of court,

that being a mode of compromising suits.

As a rule, the services of an attorney are procured

because of his personal skill and learning, and when he

is employed to argue and conduct a cause, there comes

into existence a personal trust; he cannot, therefore,

without the consent of his principal, entrust the per-

formance of this duty to another; or let the case out on

shares. Clerks and assistants may, nevertheless, be

employed to perform the merely ministerial and mechani-

cal duties.

The right of an attorney to submit his clients cause

to arbitration is a question over which there has been

a difference of opinion.

The attorney's authority and duty in the conduct of

a cause clothe him with all the powers necessary for the

proper discharge of that duty, according to the forms

and usages of the court in which the cause is pending.

And it is well settled by numerous decisions, composing

the weight of authority, that an attorney may, in the

absence of express restriction, submit his clients cause

to arbitration. Arbitration being a recognized mode of

settling suits, these decisions are in accordance with

the correct view of an attorney's office.

When arbitrators are chosen by the parties, special

co fide)ce is plared i their discretion and ability, and

to allow them to delerate their responsibilities and du-

ties to others, would work ,i-iifest injustice. The rule

of delegRtus potestas non potest deleare, applies with

special force to this class of persons. Arbitrators,may,

however, obtain advice and information from a disinter-

ested person, whene -er it become3 necessary to enable

them in properly decidinrv a technical question which has

been sub itted to their judprfent.

A short space may broperly be devoted to a corsider-

ation of the general rule, as applied to factors, brokers,

executors,trustees and corporations.

A factor or broker has not the power to delegate his

authority to a clerk or suba-ent without the assent of

his principal.

The reason for :he rule in these merchantile a.-en-

cies is, that there is a trust and confidence placed in

the personal skill aid integrity of the person authorized

to act; the principal employs the broker or factor for tb

the simple reason of this skill. There is, however, a

relaxation of the rule, in the case of merchantile per-

sons, that a consignee or af ent to whom goods are sent

for the purpose of sale, may employ a broker to sell the

goods .

The principles which underlie the ieneral rule, are

of frequent application to the case of executors, trus-

tees, and other persons standin- ii a fiduciary relation.

The powers and duties of a trustee will not permit

him to give a g7eneral authority to another, unless ex-

press authority for that purpose is given in the instru-

ment creating the trust.

Perry on Trusts, 227.

A general power to an arent to sell and convey lands

belonging to the estate, or to contract absolutely for

the sale of such lands, cannot therefore be given by

trustees. But trustees may intrust an agent with an

authority to make conditional sales of land lying at a

distance from the place of residence of the trustees; and

subject to be ratified by them.

By the statute of Ne ,r York, a power given to two or

more persons must be exercised by them all.

8 Ed. R. S. p

The criterion by which to determine whether a power

contained in a devise or other instrument can or cannot

be executed by attorney is, "if a personal trust or con-

fidence is reposed in the donee of the power, requirin;

the exercise of his judgrrent, he car ot deiegate the ex-

ecution of such power; if otherwise, it may be dele;atod.

11herever a power is given ,rhether over real estate,

or personal rrorcerty, and .vI-Cethor the execution of it

will confer a leoal or only an equitable ric-bt on the

appointee, the test will apply.

Tn the case of Pearson v. Jareson, 1 7cLean 197, it

was held that notwithstanding the power was coupled with

an interest, it could not be delegated. The power in

question was given to an executor in the followin7 mahner,

'IT hereby five to him a fall and complete power and au-

thority to dispose of the real property in the best mode

he may find convenient or nay julre proper, etc."

One can see at a Flance that this power conferred

upon the executor required the exercise of his judgment

as to what was the "best mode", and by an application of'

the test, incapable of dele,-ation.

One of the ieadinE cases on this subjoct is that of

Ber,-er and Icrd v. Duff, 4 John. Chan. 369. Berger and

Icard, executors of the estate of one J. Icard, were au-

thorized to dell two lots of land, if the imperious cir-

cumstances of the times should in their best judgment

demand'. The plaintiff Icarcl left the country and soon

10.

after executed his power of attorney, authorizin, Berger

as co-executor to sell the land. The court said: "The

executor cannot sell by attorney; the power given to Ber-

ger and Icard was a trust and confidence reposed in them,

to be exercised jointly, according to their best judgment,

under circumstances contemplated in the will. One of

the executors in this case cannot commit his judr_-ment to

the other, any more than to a stranger, for, deleratus

non potest delegare."

The cases establishin7 this point are so numerous

that I have only given two of those which are the founda-

tions of our later decisions.

Muiciple and private corporations are also subject

to the rule of "poteatas delegata non potest delegare".,

As to public or municiple corporations,there has

been much discussion, and cases may be found in favor of

and cases agqainst, including them within the rule.

Legislative powers of a municiple corporation are

in the nature of a trust conferred upon the le~islative

body of the corporation; if discretion and judgment are

to be exercised, either as to time or manner, the body or

officer entrusted with the duty must exercise it.

In Budsall v. Clark 73 N.Y. 73, the charter of

11.

Bir':hampton provided that the building and maintainin of

sidewalks shall be done at the expense of the adjoinin-

premises. That when, after proper notice, the work was

not done within the time limited, The Council shouldr

cause the same to be performed by contract or otherwise.

The Council directed that in all such cases the' Superin-

tendent of Streets should cause the work to be done.

J. Church, in ritin'-, the opinion uses the following

languag"e: "The charter conferred the power upon the

Council to cause the work to be done by contract or

otherwise. This requires the exercise of judgment and

discretion as to the manner in which the work should be

done. Whose judgment and discretion wais to be exercisedo

The legislature has said that it was the judgrment and

discretion of the comnon council. x x x As to one work

it might be judicious and economical to direct that it

be done by contract and to let to the lowest bidder; in

another, entirely by days work, and even other terms and

directions might be appropriate."

This decision seems to be in accordance with the

weight of authority.

Where power is conferred upon a municiple corpora-

tion to regulate, by license or otherwise, any calling

12.

or business, they are powerless to dele,-ate a discretion-

ary authority to others.

Last St. Louis v. '.ehring, 50 Ill. 28.

Tn croatin- such bodies it is designod to aid the

;ov rn lent in the preservation of good order, and to pro-

tect persona in the particular community from injury and

annoyance, that cannot be so readilyi , :aurded against by

the general governinent of the state I Tn conferrin- the

power upon th:) corporate body, it - is intended that the

power shall be exercised by the body created, and in the

mode prescribed; and any departure from such authority,

or any attempt of the body to transfer their porter to

others is unwarranted.

A city, authorized by its charter to errect, repair

and regulate public wharves, and to fix the rate of

wharfage thereat, cannot lease its wharves and farm out

its revenues, or empo ;rer another tofix the rate of

wharfaT-e.

Matthe-rs v. City of Alexandria

38 Mo. 115.

Lord v. City of Aconto, 47 T'is. 386.

The legislature has, by virtue of the riht' of em-

inent domainor inherent sovereignty, the authority to

take private property for public purposes. Wh4]en the

13.

legislature delegates this power to a corporation, its

exercise is subject to the rile that the power must be

strictly pursmed.

State v. Jersey,City, 25 N.J.L.

The principle that muniiciple poibr camilot be dele-

-ated, does not prevent a corporation from appointing

agents and committees and investing them with duties of

a ministerial and mechanical character.

The general management and control of the affairs of

private corporations are entrusted to the board of direc-

tors.

The directors have, as will be seen under the cases

of implied authority, the right to employ the necessary

assistants to carry on the business of the company. But

those powers which it is intended should be exercised by

them personally can in no case be delegated.

Tt is upon the personal care and attention of the

directors that the shareholders depend for the success of

their enterprise; and by reason of this, there exists the

exercise of such a judgment and discretion as will make

the rule of "potestas delegata non potest deleg7are" apply.

Having to some extent considered the general rule,

the remainder of this article may properly be given to an

14.

examination of the exciptions of this rule.

There are certain cases in which an a,-ent may law-

fully appoint a suba,ont; these are divided into four

olasses; in each one of which the aent ha, prima facie

authiority to appoint a deputy.

1. When it becomes necessary to employ a suba-,ent

in order to carry out the ac-ency.

2. "hen the act to be performed is purely riinis-

t erial.

3. \henecer the a)7ent is allowed by a lawful usage

or custom of trade to appoint a deputy.

4. When it is understood by the parties to be the

method by which the object and purpose of the arter-y

would or might be attained.

Proceedi '- to the examination of these exceptions in

the order riven:

First. Y'iere it becomes necessary to employ a sub-

agent in order to carry out the agency.

This exception manifestly arises from the ordi'iary

interpretation of the contract of artency. The authority

of an agent is always construed to include all the nec-

essary and usual means of executing it properly.

It is clear that there are many cases where, from

15.

the very nature of the duty, or Vro ' the cirum< : .tances

under which it is to be perforiied, the employment of a

deputy or subarent is of the rreatest importance to pre-

vent injury to the principal's interests.

Havinv- nreiously seen that the rnanafraent and con-

trol of a private corporation is left to the board of

directors, and that such of their duties as require the

exercise of judgment and discretion cannot be delegated,

one ,ust not confuse these duties with those which, al-

though requirin- the exercise of skill and discretion,

ca2 ot be personally performed by the directors.

A frequent case of this kind is that of a railroad

, orpoi'ation where it is necessary for the purpose of

carrying on the business, to emplo- engineers, brakernea,

etc.,wlo have qualifications notu3ually possessed by the

directors.

Agents of a town appointed to iistitute legal pro-

ceedin's have the power-of delegation, so far as to em-

ploy attorneys to conduct the proceedings. One -an

plainly see that in such cases it is necessary for the

best interests o, the town, that the assistance of a per-

son acquainted with the ways of the courts, should be

procured.

16.

Bucklar),i v. Conway, 16 Mas'l. 296.

'Whee,r r a note sent to a b2K!c for collection, 'ust,

for the protection of tl> principal,be protested, the

ank h-3 inoplied authority to employ the proper officer.

Tn case a note or chec'! i. delivereJ to a bank to be

collected at a distant point, the autLority of the bank

to e.-ipoyr a subagent at that point and to send the note

or c eck to hil-,is implied.

The liability of the bank receiving the note has

been a matter of discussion; and involves a rule of' gen-

oral applic, tion. A rle affecting trade between dif -

ferent and distant places; and which in the absence of

statutory re~ulations, special contract or usage of trae, e

is not to be determined according to the interests of any

particular persons, or class of persons, but according to

those principles which will best promote the general

weifare of the commercial community. In performing the

duty of collection, as in all other acts, a bank having

no capacity to act for itself must depend upon the in-

strumentalities of agents. This proposition is the ba-

sis of the Massachusetts doctrine, established n~y the

case of Dorchester Bank v. New England Bank, 1 Cush. 177.

The court held that the liability of the bank receiving

17.

the note extends merely to the exercise of due care in

the selection of a competent agent and to transmit the

note to such agent. This case has been followed in

Connecticut, Maryland,Illinois, Wisconsin and Mississ-

ippi.

The authorities in these states rest on the ground

of necessity; and that the risk is on the person empoly-

ing the bank for the reason that he impliedly authorizes

the appointment of a subagent.

The contrary, that a bank receiving a draft for col-

lection, from a drawer residing in another state, is, in

the absence of any express or implied contract, liable fv

a neglect occuring in its collection, whether arising

from default of its own officers, of its correspondent in

the other state, or of an apent empolyed by such corres-

pondent.

Allen v. Merchants Bank, 26 Wend. 485, estab-

lished this doctrine in New York, and notwithstandinc, the

sharp criticism which it received in Dorchester Bank v.

Bank of New England, has been adopted by the United State

States court. Excbane Nat. Bank v. Third.!J;at. Bank, 112

1.3. 278., and by the courts of Pas, N.J., Ohio and Ind-

iana.

18.

The second exception is expressed as follors:

"When Lhe act to be performed is purely ministerial."

Certain powers arise by inference as incident to

others, and are essential to their exercise. Tn the

performance of a ceneral or sp.cial agency, many acts are

to be performed, of an indifferent nature, which may be

done by one person as well as by another, and which the

agent might find inconvenient to do personally. The

maiim iitholding the power of subdelegation, only applies

where the end or object to be gained might suffer injury

y such substitution. The agent havin' first determined

the propriety of the act may direct another to perform

the e"a Acal part.

Although the governing body of a rmuniciple corpora-

tion cannot delegate the powers requirinFr the exercise of

discretion, it ray appoint agents and comittees to dis-

ch-_rre duties which are merely ministerial or mechanical.

Edwards v. City of Watertown61 How. Pr. 488.

This applies with equal force to the directors of

private corporations, who have power to employ various

inferior agents to take care of the details of the com-

pany's business.

19.

Where a power to sell land_; i8 given to an executor,

he has implied authority to employ a real estate dealer

to procure a purchaser.

Tn Norwich University v. Denny, 47 Vt. 9, it was

held that one having authority to sign the name of an-

other to a subscription paper, might procure a third per-

son to do so in his presence.

Also in Commercial Bank v. Norton, 1 Hill 501, a

general a'ent, having decided to accept two bills of ex-

change, directed a bookkeeper to do the rechanical part

of the act; the court held that there was no delegation

of authority to the book"keeper.

A question 11hich remained for a time in dispute, was

in rerrards to the power of an insurance agent to authorim

his clerks to contract for risks, etc. The leading case

of Bodine v. Insurance Co. 51 N.Y. 123, held that agents

had such power, and said: "Because as is well known they

could not transact their busina,-s if required to attend

to all the details in person#" The court seemed to in-

cline towards necessity instead of the rule under dis-

cussion. The cases which I have given will serve to

show the manner in which the rule has been applied.

Third Exception, permits an agent to appoint a depu-

20.

ty whenever there is a known and established custom or

usage of trade by which such an appointment is justified.

Parties contracting in relation to a subject matter, con-

cerning which there exists such a usage, may well be pre-

sumed to have it in contemplation. But a usage to be

good,must be reasonable,and for the benefit of trade

generally, and not for a particular class of individuals;

the usage must also be legal and consistent with the

terms of the contract.

Hence when a factor, being instructed to sell for

cash, allowed a purchaser- to take the goods away without

paying for them, he is liable for the goods and cannot

defend on the ground of a usage existing among factors,

which allowed purchasers a week to make their payments.

Bakersdale v. Brown, 9 Am. Dec. 720.

This case may be upheld on the further ground that

an agent cannot justify his acts in contravention to ex-

press instructions which he has received, on the ground

of usage or custom.

ere, however, goods were entrusted to a merchan-

dise broker to sell, not below a fixed price, and to de-

liver them and receive payment, and he deposited Lhem in

accordance with a usage with a commission merchant,

21.

taking his notes therefor; some of tlV. goods were after-

wards sold below the rgiven price. Jit was held that tlh

deposot boun-d the principal.

Laussatt v. Lippincott, 6 S..R. 386.

The liability of a bank receiving a note for collec-

tion has also been released on the ground of' usare and

cust ome.

A good authority upon this exception is the case of

Darling v. Slanwood, 14 Allen 504.

The fourth and last exception to the general rule of

-elegata potestas non potest delegare, exists where the

principal is aware that the agent will appoint a deputy.

If at the time of the creation of the agents authority

the appointment of a subagent vras contemplated by the

parties, or it was expected that a subagent might or

would be employed, the authority to make such an appoint-

ment will be implied.

As to the liability of the agent and subagent, it

may be said in eneral terms that, if an agent employs a

subagent, having authority, express or implied, to do so,

the latter is responsible directly to the principal for

his acts; but if damage results from these acts, the

agent is liable, only in case he has not exercised due

22.

care in the eloction of his subarent. But if the agent

merely to assist him in what he has undortaken to do,

employs a subagent, he does so at his own hazard, and no

privity of contract exists between the principal and sub-

agent. The agent is, therefore, responsible for the

manner in which The business is done, whether by himself

o bAT his servant, his agent.